Škoda Octavia RS

[MrH]

99% of people have no concept of Skoda.  What makes you so sure it would fail? 

You think no one knowing about Skoda is a good thing?  An unknown brand from Eastern Europe would not go over well here.

[Madman]

You think no one knowing about Skoda is a good thing?  An unknown brand from Eastern Europe would not go over well here.

Hyundai and Kia were once "unknown" brands, too.  And they both dumped some real crap on these shores before getting their acts together.  Modern Škodas are a million times better than the horrible Hyundai Excels and Kia Sephias the Koreans started with in America.

Needless to say, both Hyundai and Kia are doing very well in America these days, despite their shaky beginnings over here.

[MrH]

Hyundai and Kia were once "unknown" brands, too.  And they both dumped some real crap on these shores before getting their acts together.  Modern Škodas are a million times better than the horrible Hyundai Excels and Kia Sephias the Koreans started with in America.

Needless to say, both Hyundai and Kia are doing very well in America these days, despite their shaky beginnings over here.

They did it by undercutting the market for years. Skoda could not do the same. Huge difference.

[Madman]

They did it by undercutting the market for years. Skoda could not do the same. Huge difference.

Škoda is a "value" brand.  Their prices will certainly be very competitive against similarly equipped rivals.

[2o6]

Škoda is a "value" brand.  Their prices will certainly be very competitive against similarly equipped rivals.

Skoda is hardly a "value" brand now.

[Galaxy]

Skoda is hardly a "value" brand now.

The Octavia undercuts the Jetta by € 6,000, and a Superb starts € 2,000 cheaper then a Passat.

It may not be the cheapest out there, but then I would argo that Skoda has many advantages.

[MrH]

Škoda is a "value" brand.  Their prices will certainly be very competitive against similarly equipped rivals.

No.  It's a VWAG brand still.  Development costs are largely being done out of Europe.  They don't have a North American footprint.  The Koreans manipulated the value of their currency in order to break into the US market.  And it took years of doing that to break in.  VWAG can't do that.

[Raza]

You think no one knowing about Skoda is a good thing?  An unknown brand from Eastern Europe would not go over well here.

People said that about every foreign brand that ever came here.  A Japanese brand!?  No one will buy something from those slitty eyed bastards that bombed Pearl Harbor!  A Korean brand!?  No one will buy something from those slitty eyed those commie bastards with their Kim Jong Il; I saw Team America, I know what these people are all about.

[CALL_911]

That has little or nothing to do with why Skoda won't ever come here.

[cawimmer430]

I saw Team America, I know what these people are all about.

[Madman]

Ronery, I'm so ronery.........

[MrH]

People said that about every foreign brand that ever came here.  A Japanese brand!?  No one will buy something from those slitty eyed bastards that bombed Pearl Harbor!  A Korean brand!?  No one will buy something from those slitty eyed those commie bastards with their Kim Jong Il; I saw Team America, I know what these people are all about.

Japan also purposely devalues the yen in order to gain an export advantage.  Same exact way the Koreans entered the market.  They're able to undercut the competition in price due to currency fluctuations until they establish a manufacturing footprint and reputation.

Again, this is something VW can't do with Skoda.  If they tried to bring them here, Skoda's would either be as expensive as VWs, or not even remotely profitable.

[Raza]

Japan also purposely devalues the yen in order to gain an export advantage.  Same exact way the Koreans entered the market.  They're able to undercut the competition in price due to currency fluctuations until they establish a manufacturing footprint and reputation.

Again, this is something VW can't do with Skoda.  If they tried to bring them here, Skoda's would either be as expensive as VWs, or not even remotely profitable.

Hey, I never said that they were coming, I was just wondering how one could be so sure they'd fail were they to come. 

Although, I think the incremental cost of building a Skoda is very little, which is why they can charge less for Skodas (and Seats) than they do for Volkswagens in other markets.  I'm not making a business case, but I'm not going so far as to say the business case can't be made.

[MrH]

Hey, I never said that they were coming, I was just wondering how one could be so sure they'd fail were they to come. 

Although, I think the incremental cost of building a Skoda is very little, which is why they can charge less for Skodas (and Seats) than they do for Volkswagens in other markets.  I'm not making a business case, but I'm not going so far as to say the business case can't be made.

So if VW makes a new Passat and similar Skoda, you think they're going to let the VW version carry the full load of the necessary investment, and Skoda just gets to piggyback for free and just pay for the incremental amount necessary to differentiate it?  Not happening.

More importantly, VW has been making North American market specific vehicles.  Whatever incremental costs to make skoda variants of that has to be carried by N.A. Skoda sales entirely. Given that the volume would be small, that cost would be enormous on a per vehicle basis.

[Xer0]

The Octavia undercuts the Jetta by € 6,000, and a Superb starts € 2,000 cheaper then a Passat.

It may not be the cheapest out there, but then I would argo that Skoda has many advantages.

Well, VW Europe and VW USA have a very different lineup.  I'm not sure about the Jetta, but the Passat is a vastly different (and cheaper) car here.  I don't know how much more down market VW can make a Jetta and Passat and still make money to justify a Skoda brand under VW itself. 

Although with VW going somewhat down market and Audi continuing to trek up in features and price, maybe there is room for a brand in between?

[Raza]

So if VW makes a new Passat and similar Skoda, you think they're going to let the VW version carry the full load of the necessary investment, and Skoda just gets to piggyback for free and just pay for the incremental amount necessary to differentiate it?  Not happening.

More importantly, VW has been making North American market specific vehicles.  Whatever incremental costs to make skoda variants of that has to be carried by N.A. Skoda sales entirely. Given that the volume would be small, that cost would be enormous on a per vehicle basis.

I'm not sure exactly what their cost structure is, but it's pretty clear that they're already offering Seats and Skodas at discounted prices compared to Volkswagens, so I don't see why it's not possible that they could do the same in a new market. 

Like I said, I'm not making a business case for Skoda in the US, I'm just saying that we can't rule out that there is one, especially with how Volkswagen has been moving its cars upmarket with the last few generations.  But if you want to continue to argue for the sake of arguing, please do so. 

[Colin]

Skoda are made in Mlada Boleslav in the Czech republic, and thus benefit from Czech labour rates that are considerably lower than German ones.
Seats are made in Martorell, outside Barcelona in Espana, and thus benefit from Spanish labour rates that are considerable lower than German ones.

Both use a vast amount of componentry, and indeed the same platforms from other cars in the VW Group and thus there are (vast) economies of scale. How VW Group choose to apportion the costs of these over their huge model range is part of their marketing and brand strategy, and if you look at global sales volumes and profitability of the Group, would appear to be something that they have called well.

So, if they decided to launch Skoda as a lower cost brand in the US, I am sure that they could do so. Whether they would want to is another matter. To date, it would seem that they have focused on opening up new markets in Asia rather than the US, and as car sales there are still growing apace, that would seem to be not a bad strategy. 

[MrH]

I'm not sure exactly what their cost structure is, but it's pretty clear that they're already offering Seats and Skodas at discounted prices compared to Volkswagens, so I don't see why it's not possible that they could do the same in a new market. 

Like I said, I'm not making a business case for Skoda in the US, I'm just saying that we can't rule out that there is one, especially with how Volkswagen has been moving its cars upmarket with the last few generations.  But if you want to continue to argue for the sake of arguing, please do so. 

How can you say VW has been moving cars upmarket?  The current Passat cut $8000 off the MSRP from the previous generation.

It's not arguing when I'm right and you're wrong.  I'm just correcting you.

[Raza]

How can you say VW has been moving cars upmarket?  The current Passat cut $8000 off the MSRP from the previous generation.

It's not arguing when I'm right and you're wrong.  I'm just correcting you.

That's true, they did cut prices on some cars and moved upmarket in others.  They were moving up for quite some time (in price and size), but it does seem that their new North America specific models are at a lower price than their previous models, somewhat reversing that trend.  Which sort of pokes a hole in your theory that they couldn't build cars for the US and sell them at a lower price, don't you think?

Colin's response also highlights some key areas which you are ignoring.  If VW wanted to bring Skoda here under their own models, they most likely could. 

[MrH]

Skoda undercuts VW europe prices.  I'm saying there's no way they could undercut VW US prices and be remotely profitable.

[Raza]

Skoda undercuts VW europe prices.  I'm saying there's no way they could undercut VW US prices and be remotely profitable.

And I'm saying you don't know enough about VW's operations that you can say that with any remote sense of credibility. 

[MrH]

And I'm saying you don't know enough about VW's operations that you can say that with any remote sense of credibility. 

You have significantly decontented VW's + currency exchange penalty + logistics penalty + unknown name = doesn't make financial sense.  You're the one who compared it to the Japanese and Koreans.  Drastically different situation.

[Raza]

You have significantly decontented VW's + currency exchange penalty + logistics penalty + unknown name = doesn't make financial sense.  You're the one who compared it to the Japanese and Koreans.  Drastically different situation.

No, I didn't compare their operations to the Japanese and Koreans.  You need to go back and reread my post if that's what you got from it. 

[MrH]

People said that about every foreign brand that ever came here.  A Japanese brand!?  No one will buy something from those slitty eyed bastards that bombed Pearl Harbor!  A Korean brand!?  No one will buy something from those slitty eyed those commie bastards with their Kim Jong Il; I saw Team America, I know what these people are all about.

[Raza]

Yes.  I was simply talking about perception, not operations. 

[2o6]

Arguably, perception doesn't mean shit in this context.

[Northlands]

Skoda's on every other continent but ours. I'm beginning to wonder myself if a slightly lower cost version of VW's would work here.   

[cawimmer430]

Skoda's on every other continent but ours.

I can tell you for sure, the Eskimo's love 'em! 

[cawimmer430]

For Raza, spotted today... 

[Raza]

For Raza, spotted today...